Income payments recieved after the contract is annuitized are partially non-taxable, with a portion of each payment considered to be a return of the buyer's invested capital.

The excludable portion is determined by dividing the amount paid for the contract by the number of years the annuity is expected to pay. How long an annuity will pay is determined by government life expectancy tables. Such tables (Reg. Sec. 1.72-9) are available for both a single life and for joint lives.

The amount received each year in excess of the excludable portion will be taxed as ordinary income.

The Value of Tax Deferral
Withdrawals From A Tax-Deferred Annuity
Withdrawals Before Annuitization

Variable Annuities
Fixed Annuity
Index Annuity

This document was last modified on July 15, 1999

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